- On July 17, the grain contract for the Black Sea expired. The deal is now being sought after by Turkey.
- However, Russia has declined to extend the agreement, citing broken pledges and challenges with its own agricultural exports as a result of Western sanctions.
Initiative for Black Sea Grain
- Three significant Ukrainian ports were reopened as a result of the Initiative, which reduced Russia’s naval blockade.
- The agreement, which was mediated by the UN and Turkey in July 2022, let cargo ships to move between Ukrainian ports and to be inspected to make sure they were not transporting weapons.
- The agreement, which has already been extended twice, will finish on July 17, 2023.
- In an effort to address the food crisis in 2022, the agreement established protocols for the secure export of grain from specific ports.
- It offers a secure maritime humanitarian corridor for Ukrainian exports from three of its major ports, Chornomorsk, Odesa, and Yuzhny/Pivdennyi on the Black Sea (especially for food grains).
Results of this agreement
- Since the arrangement was negotiated, over 9.8 million tonnes of grains have been shipped.
- Due to the shortage of supplies, those who had been stockpiling grain in the hopes of selling it for a significant profit were suddenly forced to do so.
- The project has also been acknowledged with making a significant impact on the crisis caused by the rising expense of living worldwide.
Why was this agreement made?
- Ukraine’s Contribution to UN Food Aid Programmes: Ukraine is a big exporter of food grains, such as wheat and maize.
- Russian invasion impact: Russia’s invasion and blockade of Ukrainian ports generated concerns about global food prices and food security.
- Russia opposes the agreement and cites unfulfilled promises as justification. According to Russia, sanctions from the West have a negative impact on its own agricultural exports and fertiliser production.
- Russia suffers difficulties with payment systems, insurance, shipping, and logistics despite the fact that there are no direct limitations on its agricultural exports.
- Frustration and kindness: The Russian President underlined his frustration and noted that his country had extended the agreement out of kindness, but he believes that enough is enough.
- Change in Grain Destinations: According to Russia, the agreement was designed to secure global food security, but Ukraine has mostly sold to high- and middle-income countries, while the UN adds that food prices have decreased, helping less developed countries.
Impact on the Production and Exports of Grains
- Russian Dominance in Wheat Exports: Russia continues to be the world’s leading exporter of wheat, with major markets in the Middle East, North Africa, and Central Asia.
- Ukraine’s Falling Shipments: With production at an 11-year low, Ukraine’s grain shipments are expected to more than halve.
- Markets are shifting: Due to the ease of shipping, Ukraine’s grain markets have moved from Asia and North Africa to Europe, resulting in a glut of Ukrainian grain and protests from farmers in Eastern European nations.
Source: https://www.reuters.com/markets/commodities/with-grain-deal-focus-putin-meet-erdogan-russia-2023-09-04/